Proxy Statement 2016 Annual Report
Proxy Statement 2017 Annual Report Hewlett Packard Proxy Statement Hewlett Packard Proxy Statement Page 1 Enterprise 2017 Annual Report Enterprise 2017 Annual Report
Dear Stockholders,
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[1] Footnote example Hewlett Packard Proxy Statement Page 1 Enterprise 2017 Annual Report
Dear Stockholders,
I am honored to write my first letter to you as CEO of Hewlett Packard Enterprise. As a 22-year Hewlett Packard veteran, I have a lot of pride in our company and people. I fundamentally believe HPE’s innovation will improve the world for our customers, partners, and employees.
Transformation of HPE
Our company’s strong position today was made possible by the work we did during the last several years. That work was led by my predecessor, Meg Whitman, who set up HPE for great success by strengthening our leadership team, reinvigorating our culture, and reigniting our innovation. During this time, we created tremendous shareholder value and put our long-term strategy in place. Without Meg’s vision and courage, HPE would not be where it is today—poised for a bright future.
In 2017, we accelerated our progress by completing a number of strategic actions, including the spin- mergers of our Enterprise Services business with CSC and our Software business with Micro Focus. These transactions created new industry-leading companies and delivered more than $20 billion of value to HPE. At the same time, we continued to strengthen our portfolio in key growth areas through acquisitions like these:
• SGI, bolstering our industry-leading high-performance compute business
• Nimble Storage, solidifying our leadership in all-flash storage
• SimpliVity, making us a leader in the fast growing hyper-converged market
• Cloud Technology Partners, making us a global leader in cloud services
Now, we have embarked on the next phase of our journey with a program we call HPE Next. This program will help us simplify the way we work, drive execution, and invest in innovation that will differentiate our solutions. Through HPE Next, we will create a purpose-built company for today and tomorrow’s competitive environment that will continue to lead in our markets for years to come.
Our strategy and vision
I believe HPE has the strongest portfolio in the industry today. We enable our customers to harvest, analyze, and store the critical data that improves customer experiences, drives new business models, and increases productivity. These capabilities are creating a new breed of data-driven enterprises. Our strategy is laser focused on enabling this enterprise transformation by helping our customers connect their data from the core, to the cloud, to the edge through three strategic pillars.
First, as each customer embraces the unique mix of private and public cloud environments that best meet their needs, we are seeing an increasingly “hybrid” IT landscape—and we make Hybrid IT simple. We do that through offerings that help customers optimize their core IT environments with secure software-defined technologies that seamlessly integrate across traditional IT and multiple public and Hewlett Packard Proxy Statement Enterprise 2017 Annual Report
private clouds. Our solutions provide transparency and manageability for all of their applications and data, wherever they live.
We continue to launch ground-breaking innovation in support of this vision. For example, in December we introduced Infosight, which is our new predictive AI technology across our storage portfolio, enabling the systems to predict and prevent problems before they happen. Leveraging advanced machine learning, this technology is an important step toward our vision for an autonomous data center.
We also introduced OneSphere, a software management platform that lets customers deploy, operate, and optimize on-premises private cloud environments and public cloud capabilities through a simple, unified experience. I believe that no one else in the market can match the platform we have created.
The second pillar of our strategy is to power the Intelligent Edge. The “edge” is the world outside the data center. It is where enterprises interact with their customers, where employees congregate, and where companies manufacture their products. We are seeing a data-powered revolution happening at the edge as customers capture and analyze the unprecedented amount of data being created to drive their businesses.
With Aruba, we have highly differentiated offerings in this area that allow customers to securely connect edge environments and drive new experiences and new revenue streams. Our Edgeline converged systems bring storage and compute directly to the source of the data that needs to be analyzed in a form factor optimized for the edge environments. And, our Universal IoT software platform seamlessly integrates data from disparate IoT systems at massive scale.
These are all areas where we are well ahead of the market. And, the industry has taken notice. Late last year, Aruba was named a leader in Gartner’s Magic Quadrant for wired and wireless networking, and placed first for vision. That was the first time Cisco was displaced from this position.
Third, services are more critical than ever. Increasingly, our business is driven by services expertise that helps customers navigate these incredible transformations, and our Pointnext services organization provides just that. We are also seeing growing interest in alternative consumption models that give customers financial flexibility through pay-per-use options. Our offering in this area, Flexible Capacity, is unique in the marketplace.
The time is now
I am confident in our future. I truly believe we have built the best portfolio in the industry. We are a more focused and nimble company. And we have momentum. With all this in place, I believe we will continue to deliver significant shareholder value.
It is such a great time to be a part of Hewlett Packard Enterprise. I could not be more proud and excited to lead this company.
Thank you for your continued support.
Best, Hewlett Packard Proxy Statement Page 3 Enterprise 2017 Annual Report
Board of Directors*
Dan Ammann Antonio F. Neri Marc L. Andreessen Raymond E. Ozzie Michael J. Angelakis Gary M. Reiner Leslie A. Brun Patricia F. Russo Pamela Carter Lip-Bu Tan Raymond J. Lane Margaret C. Whitman Ann M. Livermore Mary Agnes Wilderotter
Executive Team *
Henry Gomez John F. Schultz Executive Vice President, Executive Vice President, Chief Marketing and Chief Legal and Administrative Communications Officer Officer and Corporate Secretary
Alan R. May Timothy C. Stonesifer Executive Vice President, Executive Vice President, Human Resources Chief Financial Officer
Antonio F. Neri President and Chief Executive Officer
*Members of the Board and Executive Team as of February 1, 2018. 18NOV201618585199 2018 PROXY STATEMENT
Patricia F. Russo Hewlett Packard Enterprise Company Chair of the Board 3000 Hanover Street Palo Alto, CA 94304 www.hpe.com To our fellow Stockholders: This marks the end of an era and the beginning of the next for HPE. Nearly seven years ago, Meg Whitman joined Hewlett-Packard Company with a bold, innovative turnaround plan designed to create a company with a clear vision and the right assets through portfolio optimization and enterprise transformation. This fiscal year, under the oversight of this Board of Directors, Meg led HPE through the culminating steps of that plan. Now, HPE stands on the horizon of the next era with a crystal clear, long-term oriented strategy, an agile corporate structure, a streamlined portfolio, and the challenge tested leadership of Antonio Neri. I am humbled to serve as Board Chair through HPE’s transition from the era of transformation into our next chapter. This journey has not been without its trying moments, but I can speak for every member of HPE’s Board of Directors when I say that it has been exciting and fulfilling. We have deliberately and successfully established a board that is optimally designed to deliver guidance tailored to HPE while maintaining a diversity of experience and thought that is vital to our success. This Board is experienced. This Board is vigilant. This Board is committed. Throughout this era of transformation, this Board has expanded its depth of oversight far beyond traditional meetings and the traditional boardroom setting into active oversight, including one-on-one and small group sessions with members of management, panel conversations at employee meetings, stockholder engagement participation, continued education, and appearances at customer events. We have been and we remain committed and excited to provide oversight and guidance to HPE’s management on the execution of our strategy. Sustainability and corporate citizenship are core values with Board level oversight at HPE and I want to take this moment to note that, as HPE has undergone its era of transformation, society has faced an ever-changing geopolitical landscape, a volatile economic framework, and an uncertain future. Now, more than ever, corporations must adhere to sound corporate governance and maintain values that responsibly create stockholder value. Our Board and our management team have maintained a best in class governance profile and remain committed to applying the innovation engine of HPE to corporate governance and citizenship. The annual meeting is a time for us to reflect on where we have been and where we are going. We are pleased and excited to invite you to attend the third annual meeting of stockholders of HPE on Wednesday, April 4, 2018 at 9:00 a.m., Pacific Time. This year’s annual meeting will again be a completely virtual meeting of stockholders, conducted via live webcast. We are pleased to provide access to our proxy materials over the Internet under the U.S. Securities and Exchange Commission’s ‘‘notice and access’’ rules. As a result, we are mailing to many of our stockholders a notice of Internet availability instead of a paper copy of this proxy statement and our 2017 Annual Report. The notice contains instructions on how to access those documents over the Internet as well as how to receive a paper copy of our proxy materials. All stockholders who do not receive a notice will receive a paper copy by mail unless they have previously requested delivery of proxy materials electronically. Continuing to employ this distribution process will conserve natural resources and reduce the costs of printing and distributing our proxy materials. Your vote is important to us and I do hope you will vote as soon as possible. In closing, I would like to convey sincere appreciation. First, to HPE’s employees: this company’s most important capital truly is its human capital. On behalf of the entire Board of Directors, we recognize and celebrate the dedication and ingenuity required to deliver this transformation. Second, to our customers, our valued partners who are the reason driving everything we do. And finally, to you, our stockholders, we truly appreciate your confidence and investment in HPE. As we accelerate into the next era, we are honored and delighted that you have chosen to join us. Sincerely,
20DEC201618424127 Patricia F. Russo Chair of the Board 2018 PROXY STATEMENT 18NOV201618585199 HEWLETT PACKARD ENTERPRISE COMPANY 3000 Hanover Street Palo Alto, California 94304 (650) 687-5817 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Time and Date 9:00 a.m., Pacific Time, on Wednesday, April 4, 2018 Place Online at HPE.onlineshareholdermeeting.com Items of Business (1) To elect the 13 directors named in this proxy statement (2) To ratify the appointment of the independent registered public accounting firm for the fiscal year ending October 31, 2018 (3) To approve, on an advisory basis, the company’s executive compensation (4) To consider and vote upon one stockholder proposal, if properly presented (5) To consider such other business as may properly come before the meeting Adjournments and Any action on the items of business described above may be considered at the annual meeting at the time Postponements and on the date specified above or at any time and date to which the annual meeting may be properly adjourned or postponed. Record Date You are entitled to vote only if you were a Hewlett Packard Enterprise Company stockholder as of the close of business on February 5, 2018. Virtual Meeting Stockholders of record as of February 5, 2018, will be able to participate in the annual meeting by visiting Admission HPE.onlineshareholdermeeting.com. To participate in the annual meeting, you will need the 16-digit control number included on your notice of Internet availability of the proxy materials, on your proxy card or on the instructions that accompanied your proxy materials. The annual meeting will begin promptly at 9:00 a.m., Pacific Time. Pre-Meeting The online format for the annual meeting also allows us to communicate more effectively with you via www.proxyvote.com for beneficial owners and proxyvote.com/hpe for registered stockholders and you can submit questions in advance of the annual meeting, and also access copies of our proxy statement and annual report. Voting Your vote is very important to us. Regardless of whether you plan to participate in the annual meeting, we hope you will vote as soon as possible. You may vote your shares over the Internet or via a toll-free telephone number. If you received a paper copy of a proxy or voting instruction card by mail, you may submit your proxy or voting instruction card for the annual meeting by completing, signing, dating and returning your proxy or voting instruction card in the pre-addressed envelope provided. Stockholders of record and beneficial owners will be able to vote their shares electronically at the annual meeting (other than shares held through the Hewlett Packard Enterprise Company 401(k) Plan, which must be voted prior to the meeting). For specific instructions on how to vote your shares, please refer to the section entitled Questions and Answers—Voting Information beginning on page 87 of the proxy statement. By order of the Board of Directors,
9JAN201321561766 JOHN F. SCHULTZ Executive Vice President, Chief Legal and Administrative Officer and Corporate Secretary This notice of annual meeting and proxy statement and form of proxy are being distributed and made available on or about February 13, 2018. Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on April 4, 2018. This proxy statement and Hewlett Packard Enterprise Company’s 2017 Annual Report are available electronically at www.hpe.com/investor/stockholdermeeting2018 and with your 16-digit control number by visiting www.proxyvote.com for beneficial owners and proxyvote.com/hpe for registered stockholders. 2018 PROXY STATEMENT 18NOV201618585199 TABLE OF CONTENTS
PROXY STATEMENT EXECUTIVE SUMMARY 1 CORPORATE GOVERNANCE 2 Stockholder Outreach and Engagement 2 Corporate Citizenship Through Living Progress 4 Hewlett Packard Enterprise Board of Directors 5 Board Composition 5 Director Candidate Selection and Evaluation 7 Board and Committee Meetings and Attendance 8 Board Leadership Structure 8 Board Structure and Committee Composition 9 Board Risk Oversight 13 Succession Planning 14 Director Evaluations 15 Limits on Director Service on Other Public Company Boards 15 Director Independence 15 Director Compensation and Stock Ownership Guidelines 19 Non-Employee Director Stock Ownership Guidelines 22 Stock Ownership Information 23 Common Stock Ownership of Certain Beneficial Owners and Management 23 Section 16(a) Beneficial Ownership Reporting Compliance 25 Related Persons Transaction Policies and Procedures 25 Governance Documents 27 Communications with the Board 27 PROPOSALS TO BE VOTED ON 28 PROPOSAL NO. 1 Election of Directors 28 PROPOSAL NO. 2 Ratification of Independent Registered Public Accounting Firm 41 PROPOSAL NO. 3 Advisory Vote to Approve Executive Compensation 42 PROPOSAL NO. 4 Stockholder Proposal Related to Action by Written Consent of Stockholders 44 EXECUTIVE COMPENSATION 49 Compensation Discussion and Analysis 49 Executive Summary 49 Executive Compensation Pay-for-Performance Philosophy 51 Oversight and Authority over Executive Compensation 52 Detailed Compensation Discussion and Analysis 53 Process for Setting and Awarding Fiscal 2017 Executive Compensation 54 Determination of Fiscal 2017 Executive Compensation 55 Other Compensation-related Matters 63 HRC Committee Report on Executive Compensation 66 Summary Compensation Table 67 Grants of Plan-Based Awards in Fiscal 2017 69 Outstanding Equity Awards at 2017 Fiscal Year-End 71 Option Exercises and Stock Vested in Fiscal 2017 72 Fiscal 2017 Pension Benefits Table 73 Fiscal 2017 Non-qualified Deferred Compensation Table 74 Potential Payments Upon Termination or Change in Control 76 EQUITY COMPENSATION PLAN INFORMATION 80 AUDIT-RELATED MATTERS 81 Principal Accounting Fees and Services 81 Report of the Audit Committee of the Board of Directors 83 OTHER MATTERS 84 QUESTIONS AND ANSWERS 85 Proxy Materials 85 Voting Information 87 Annual Meeting Information 91 Stockholder Proposals, Director Nominations and Related Bylaw Provisions 92 2018 PROXY STATEMENT 18NOV201618585199 Proxy Statement Executive Summary
The following is a summary of proposals to be voted on at the annual meeting. This is only a summary, and it may not contain all of the information that is important to you. For more complete information, please review the proxy statement as well as our 2017 Annual Report, which includes our Annual Report on Form 10-K for the fiscal year ended October 31, 2017. References to ‘‘Hewlett Packard Enterprise,’’ ‘‘HPE,’’ ‘‘the Company,’’ ‘‘we,’’ ‘‘us’’ or ‘‘our’’ refer to Hewlett Packard Enterprise Company.
On November 1, 2015, HP Inc., formerly known as Hewlett-Packard Company (referred to in this proxy statement as ‘‘HP’’, ‘‘HPI’’, ‘‘HP Inc.’’, ‘‘HP Co.’’, ‘‘Parent’’, or ‘‘our former parent’’) spun-off Hewlett Packard Enterprise Company, pursuant to a separation and distribution agreement. To effect the spin-off, HP Inc. distributed all of the shares of Hewlett Packard Enterprise common stock owned by HP Inc. to its stockholders on November 1, 2015. Holders of HP Inc. common stock received one share of Hewlett Packard Enterprise common stock for every share of HP Inc. stock held as of the record date. As a result of the spin-off, we now operate as an independent, publicly-traded company.
ANNUAL MEETING OF STOCKHOLDERS
Time and Date 9:00 a.m., Pacific Time, on Wednesday, April 4, 2018 Place Online at HPE.onlineshareholdermeeting.com Record Date February 5, 2018
PROPOSALS TO BE VOTED ON AND BOARD VOTING RECOMMENDATIONS
Proposal 1 Proposal 2 Election of Directors Ratification of Independent Registered Public Accounting Firm The Nominating, Governance and Social Responsibility Committee has nominated 13 directors The Audit Committee has appointed, and is asking for re-election at the annual meeting to hold office stockholders to ratify, Ernst & Young LLP (‘‘EY’’) as until the 2019 annual meeting. Information regarding the independent registered public accounting firm for the skills and qualifications of each nominee can be fiscal 2018. Information regarding fees paid to and found on page 28. services rendered by EY can be found on page 41.
Recommendation: Our Board recommends a vote Recommendation: Our Board recommends a vote FOR the election to the Board of each of the 13 FOR the ratification of the appointment. nominees.
Proposal 3 Proposal 4 Advisory Vote to Approve Executive Stockholder Proposal Related to Action by Compensation Written Consent of Stockholders
Our Board of Directors and HR and Compensation We received a stockholder proposal seeking to have Committee of the Board are committed to excellence us amend HPE’s Bylaws to enable stockholder action in corporate governance and to executive by written consent and, if properly presented, the compensation programs that align the interests of our proposal will be voted on at the annual meeting. executives with those of our stockholders. Information Information can be found on page 44. regarding our programs can be found on page 42. Recommendation: Our Board recommends a vote Recommendation: Our Board recommends a vote AGAINST a stockholder proposal seeking to have us FOR the approval of the compensation of our named amend HPE’s Bylaws to enable stockholder action by executive officers. written consent.
HEWLETT PACKARD ENTERPRISE 1 | 1 2018 PROXY STATEMENT 18NOV201618585199 Corporate Governance Our Board of Directors (the ‘‘Board’’) is committed to excellence in corporate governance. We know that our long-standing tradition of principled, ethical governance benefits you, our stockholders, as well as our customers, employees and communities, and we have developed and continue to maintain a governance profile that aligns with industry-leading standards. We believe that the high standards set by our governance structure have had and will continue to have a direct impact on the strength of our business. The following table presents a brief summary of highlights of our governance profile, followed by more in-depth descriptions of some of the key aspects of our governance structure.
Board Conduct and Independence and Oversight Participation Stockholder Rights Development and oversight of Independent Chair Proxy Access Right for execution of Company eligible stockholders holding 10 of 13 director nominees strategy 3% or more of outstanding are independent by NYSE common stock for at least Rigorous stock ownership standards three years to nominate up to guidelines, including a 7x Executive sessions of 20% of the Board base salary requirement for non-management directors the CEO Special Meeting Right for generally held at each Board stockholders of an aggregate Regular, conscientious risk and committee meeting of 25% of voting stock assessment Audit, HRC, and NGSR All directors annually elected; Standards of Business Committees are each made no staggered Board Conduct, applied to all up entirely of independent directors, executive officers directors Majority voting in uncontested and employees director elections Governance guidelines Annual review of express preference for the No ‘‘poison pill’’ developments in best separation of the Chair and No supermajority voting practices CEO roles requirements to change Significant time devoted to Participation in one-on-one organizational documents succession planning and meetings with management Expansive direct engagement leadership development Expansive direct engagement with stockholders efforts with stockholders Annual evaluations of Board, Frequent participation at committees, and individual customer events directors
STOCKHOLDER OUTREACH AND ENGAGEMENT We maintain a dynamic, robust, and multi-faceted stockholder outreach program designed to provide continuous and meaningful stockholder engagement and participation across our broad base of stockholders, throughout the entire year. Rather than focusing on short term results, We maintain the goal of fostering strong stockholder relationships leading to mutual understanding of issues and approaches, ultimately giving the company insight into stockholder support as it designs and implements strategies for long-term growth.
The key elements of our stockholder outreach program are (i) the Securities Analyst Meeting, (ii) the Board Outreach Program, and (iii) the Annual Stockholders Meeting. Our comprehensive stockholder engagement program is supplemented by our year-round investor relations outreach program that includes post-earnings communications, roadshows, bus tours, one-on-one conferences, group meetings, technology webcasts, and general availability to respond to investor inquiries. The multi-faceted nature of this program allows us to
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Corporate Governance (continued) maintain meaningful engagement with a broad audience including large institutional investors, smaller to mid-size institutions, pension funds, advisory firms, and individual investors.
We recognize that stockholders are the owners of the company and remain committed to stockholder outreach programs that are truly a dialogue. We use every element of the outreach program to provide stockholders with honest, candid information on relevant issues, sharing the rationale for our corporate strategy and the impact of the Board’s oversight in key areas of the company, gathering stockholder views and feedback on each area, as well as on the outreach program itself.
Securities Analyst Meeting We lauch our stockholder outreach program in the fall with our annual Securities Analyst Meeting (SAM). At SAM, our leadership team provides an update on strategy and the financial outlook, including detailed information for each business unit, for the upcoming fiscal year. Although the event itself is geared toward the analyst community, a primary purpose of SAM is to give stockholders direct insight into our business, strategy, and outlook, providing those who plan to participate in the off-season engagement an informed basis to formulate their views and questions. Accordingly, the entire event is publicly broadcast live, with the recorded videos and transcripts also available on our investor relations website following the event.
Board Outreach Program On the heels of SAM comes a cornerstone of our stockholder outreach—our innovative Board Outreach Program. The program consists of focused, one-on-one meetings between stockholders and our directors over a three-month period that are designed to give institutional stockholders an opportunity to better understand the companies in which they invest. These meetings enable our stockholders to better fulfil their fiduciary duties toward their investors and voice any concerns they have about HPE to our directors. This season, we extended our extensive board outreach efforts to holders of nearly 47% of our stock, with holders of more than 42% of our stock electing to participate.
We maintain clear structural goals for these meetings:
Provide direct stockholder access to the Board. We believe it is important for stockholders to hear directly from our Board, just as it is important for directors to hear stockholder’s concerns and perspectives unfiltered. Directors participating in the meetings include the Board Chair, committee chairs, as well as other directors with whom stockholders may have a particular interest in meeting. A limited number of members of management are also present, for the primary purpose of facilitating the meetings as well as being available to answer more technical questions that may arise.
Achieve meaningful benefits. In order to maximize the benefit of the engagement to both the investor and the company, we take the time to conduct extensive research to understand each institutional stockholder’s voting policies and patterns, salient issues and other areas of concern, and goals of engagement. Similarly, we understand institutional governance teams work under time and resource constraints, and by inviting participants well in advance of the meeting, and providing detailed updates of the company’s strategy and outlook during our Securities Analysts Meeting and other investor and analyst events, we ensure stockholder participants will have opportunity and information to prepare and engage in meaningful dialogue.
Comprehensive discussion. We strive to ensure the stockholder meetings cover a comprehensive range of key topics including short- and long-term strategy, capital allocation targets, governance and board oversight, Mergers and Acquisitions activity, succession planning, and environmental and social concerns. Maintaining a disciplined approach to the discussions, and allowing adequate meeting times, ensures matters important to stockholders are not neglected in favor of addressing only current salient issues. HEWLETT PACKARD ENTERPRISE 3 | 3 2018 PROXY STATEMENT 18NOV201618585199
Corporate Governance (continued) Virtual Stockholder Meeting Our year-long stockholder outreach program culminates in our 2017 Annual Meeting annual stockholder meeting, which is conducted virtually through Stockholder Question Composition a live webcast and online stockholder tools. We have created and implemented the virtual annual meeting format in order to facilitate stockholder attendance and participation by enabling stockholders to participate fully, and equally, from any location around the world, at no cost. We believe this is the right choice for a company with a global footprint; not only bringing cost savings to the company and stockholders, but also increasing the ability to engage with all stockholders, regardless of size, resources, or physical location. We remain very sensitive to concerns regarding virtual meetings generally from investor advisory groups and other stockholder rights advocates, who have voiced concerns that virtual meetings may diminish stockholder voice or reduce accountability. Accordingly, we have designed this virtual format to enhance, rather than constrain, Accounting Firm Labor Climate stockholder access, participation and communication. For Exec Comp Governance Politics example, the online format allows stockholders to communicate Strategy Spin Merge Other with us in advance of, and during, the meeting so they can ask 2FEB201819255872 any questions of our Board or management. During the live Q&A session of the meeting, we answer questions as they come in and address those asked in advance, as time permits. We have committed to publishing and answering each question received following the meeting. In 2017, this resulted in more than 200 stockholder questions and comments communicated to, and answered by, our directors and management. Although the live webcast is available only to stockholders at the time of the meeting, a replay of the meeting is made publicly available on the company’s investor relations site. In additional to strong participation from individual stockholders, we have continued to receive positive support from institutional stockholders who have indicated the virtual format is beneficial and appropriate in the context of our broader direct outreach program.
We have carefully designed our outreach program to provide continuous and meaningful stockholder engagement and participation. Our committed Board of Directors and management team value these interactions and invest meaningful time and resources to ensure that they have an open line of communication with stockholders. Stockholders and other stakeholders may directly communicate with our Board by contacting: Secretary to the Board of Directors, 3000 Hanover Street, MS 1050, Palo Alto, California 94304; e-mail: [email protected] .
CORPORATE CITIZENSHIP THROUGH LIVING PROGRESS Sustainability and corporate citizenship are core values embedded in HPE at every level. To that end, we take a thoughtful approach to our global citizenship efforts through our Living Progress program. This program is overseen by the NGSR Committee which regularly reviews, assesses, reports and provides guidance to management and the Board regarding HPE’s policies and programs relating to global citizenship and the impact of HPE’s operations on employees, customers, suppliers, partners and communities worldwide. Our commitment to corporate citizenship has been rewarded, earning us the distinction of Industry Mover in the 2017 Dow Jones Sustainability Index (‘‘DJSI’’). HPE holds the highest industry score globally in six DJSI sections: Climate Strategy, Human Rights, Talent Attraction and Retention, Corporate Governance, Policy Influence, and Privacy Protection. HPE also achieved the highest possible ranking from the Carbon Disclosure Project for our carbon management and disclosure, ranking in the top 4% of companies evaluated. Detailed
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Corporate Governance (continued) below are a few ways Living Progress creates sustainable solutions for our company, our customers, and our world.
Our company Our customers Our world Uncompromising stance on Innovating sustainable IT HPE Foundation disaster relief, human rights infrastructure employee donations, and community investment Sustainable, responsible Customers engaged on supply chain sustainability efforts HPE technology applied to solve global challenges Environmentally conscious operations
More information regarding our award-winning Living Progress plan and our recent annual reports are available at https://www.hpe.com/us/en/living-progress.html .
HEWLETT PACKARD ENTERPRISE BOARD OF DIRECTORS Board Composition Our Board was thoughtfully structured after a global search targeting world-class directors with the diversity of skills, experience, ethnicity, and gender resulting in exceptional leadership for HPE.
The selection criteria for our directors included:
• high professional and personal ethics and values consistent with our longstanding values and standards;
• broad policy-making experience in business, government, education, technology or public service;
• sufficient time to devote to the Board and our company;
• diversity of background and experience, including: senior leadership and operating experience in a publicly listed company; board experience in a publicly listed company; financial, industrial/technical, brand marketing or international expertise; and
• experience as an investor with a commitment to enhancing stockholder value and representation of the interests across our stockholder base.
The following page includes a skills and qualifications matrix highlighting many of the key experiences and competencies our directors bring to Hewlett Packard Enterprise Company.
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Corporate Governance (continued) Hewlett Packard Enterprise Company Board of Directors Skills and Qualifications Daniel Ammann Marc L. Andreessen Michael J. Angelakis Leslie A. Brun Pamela L. Carter Raymond J. Lane Ann M. Livermore Antonio F. Neri Raymond E. Ozzie Gary M. Reiner Patricia F. Russo Lip-Bu Tan Margaret C. Whitman Mary Agnes Wilderotter Risk and Compliance Experience identifying, mitigating, and managing risk in enterprise operations helps our directors ● ●●● ●● ● ●● effectively oversee our Enterprise Risk Management program, which is vital to customer and stockholder protection. Financial and Audit Experience in accounting and audit functions and the ability to analyze financial statements and ● ●●● ● ● ●● oversee budgets is key to supporting the Board’s oversight of our financial reporting and functions. Business Development and Strategy Experience in setting and executing long-term ●●●●●●●●●●●●●● corporate strategy is critical to the successful planning and execution of our long-term vision. Investment Experience in venture and investment capital underlies our capital allocation decisions and ●●●●●●●●● ensures that the investors’ view of our business is incorporated in board discussions. Executive Level Leadership Experience in executive positions within ●●●●●●●●●●●●●● enterprise businesses is key to the effective oversight of management. Business Ethics Experience in and continued dedication to the highest levels of ethics and integrity within the ●●●●●●●●●●●●●● enterprise context underpins the holistic commitment of HPE to operate with integrity. Extensive Industry Leadership Experience at the executive level in the technology ●●● ●●●●●●●●●● sector enhances our Board’s ability to oversee management in a constantly changing industry. Legal, Regulatory and Public Policy Experience in setting and analyzing public policy ●● ●● supports Board oversight of our business in heavily regulated sectors. Corporate Governance Experience on other public company boards provides insight into developing practices ●●●●●●● ●●●●● consistent with our commitment to excellence in corporate governance. International Experience operating in a global context by managing international enterprises, residence ●●●●●●●● abroad, and studying other cultures enables oversight of how HPE navigates a global marketplace. Cyber Security Experience in understanding the cyber security ● ●●●●●●● threat landscape is increasingly important in our own business and that of our customers.
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Corporate Governance (continued) Director Candidate Selection and Evaluation Stockholder Recommendations The policy of the NGSR Committee is to consider properly submitted stockholder recommendations of candidates for membership on the Board as described below under ‘‘Identifying and Evaluating Candidates for Directors.’’ In evaluating such recommendations, the NGSR Committee seeks to achieve a balance of knowledge, experience and capability on the Board and to address the membership criteria set forth on page 28 under ‘‘Proposals to be Voted on—Proposal No. 1 Election of Directors—Director Nominee Experience and Qualifications.’’ Any stockholder recommendations submitted for consideration by the NGSR Committee should include verification of the stockholder status of the person submitting the recommendation and the recommended candidate’s name and qualifications for Board membership and should be addressed to:
Corporate Secretary Hewlett Packard Enterprise Company 3000 Hanover Street MS 1050 Palo Alto, California 94304 Email: [email protected]
Stockholder Nominations In addition, our Bylaws permit stockholders to nominate directors for consideration at an annual stockholder meeting and, under certain circumstances, to include their nominees in the Hewlett Packard Enterprise proxy statement. For a description of the process for nominating directors in accordance with our Bylaws, see ‘‘Questions and Answers—Stockholder Proposals, Director Nominations and Related Bylaw Provisions—How may I recommend individuals to serve as directors and what are the deadlines for a director nomination?’’ on page 92.
Identifying and Evaluating Candidates for Directors The NGSR Committee, in consultation with the Chair, assesses the appropriate size of the Board, as well as the alignment of director skills with company strategy, and whether any vacancies on the Board are expected due to retirement or otherwise, or whether the Board would benefit from the addition of a director with a specific skillset. The NGSR Committee also considers board refreshment in its annual evaluation of the Board. We balance our respect for historical knowledge of our company with our regard for fresh perspectives by considering director tenure on a case-by-case basis, rather than imposing arbitrary term limits.
The NGSR Committee uses a variety of methods for identifying and evaluating nominees for director. Candidates may come to the attention of the NGSR Committee through current Board members, professional search firms, stockholders or other persons. Identified candidates are evaluated at regular or special meetings of the NGSR Committee and may be considered at any point during the year. As described above, the NGSR Committee considers properly submitted stockholder recommendations of candidates for the Board to be included in our proxy statement. Following verification of the stockholder status of individuals proposing candidates, recommendations are considered collectively by the NGSR Committee at a regularly scheduled meeting. If any materials are provided by a stockholder in connection with the nomination of a director candidate, such materials are forwarded to the NGSR Committee. The NGSR Committee also reviews materials provided by professional search firms and other parties in connection with a nominee who is not proposed by a stockholder. In evaluating such nominations, the NGSR Committee seeks to achieve a balance of knowledge, experience and capability on the Board that will enable the Board to effectively oversee the business. The NGSR Committee evaluates nominees recommended by stockholders using the same criteria as it uses to evaluate all other candidates.
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Corporate Governance (continued) We engage a professional search firm on an ongoing basis to identify and assist the NGSR Committee in identifying, evaluating and conducting due diligence on potential director nominees. In each instance, the NGSR Committee considers the totality of the circumstances of each individual candidate.
Board and Committee Meetings and Attendance Our Board has regularly scheduled meetings and an annual meeting of stockholders each year, in addition to special meetings scheduled as appropriate. During fiscal 2017, our Board held 13 meetings. In addition, our five committees held a total of 32 meetings, with the Audit Committee meeting nine times, the HRC Committee meeting five times, and the NGSR Committee meeting three times. Each of the five regularly scheduled Board meetings held during fiscal 2017 included an executive session, consisting of only non-management directors, and one included a private session consisting of only independent directors. The Board expects that its members will rigorously prepare for, attend and participate in all Board and applicable Committee meetings and each annual meeting of stockholders. When directors are unable to attend a meeting, it is our practice to provide all meeting materials to the director, and the Chair or the relevant committee chair consults with and apprises the director of the meeting’s subject matter. In addition to participation at Board and committee meetings, our directors discharged their responsibilities throughout the year through frequent one-on-one meetings and other communications with our Chair, our Chief Executive Officer (‘‘CEO’’) and other members of senior management regarding matters of interest.
Each of our incumbent directors who was a director during fiscal 2017 attended at least 75% of the total number of meetings of the Board of Directors and the total number of meetings held by all committees of the Board of Directors on which each such director served, during the period for which each such director served.
Directors are also encouraged to attend our annual meeting of stockholders. Last year, each of our directors was in attendance.
Board Leadership Structure The Board is currently led by an independent director, Patricia F. Russo, Chair of the Board. Our Bylaws and Corporate Governance Guidelines permit the roles of Chair of the Board and Chief Executive Officer to be filled by the same or different individuals, although the Corporate Governance Guidelines express a preference for the separation of the two roles. This flexibility allows the Board to determine whether the two roles should be combined or separated based upon our needs and the Board’s assessment of its leadership from time to time. The Board believes that our stockholders are best served at this time by having an independent director serve as Chair of the Board. Our Board believes this leadership structure effectively allocates authority, responsibility, and oversight between management and the independent members of our Board. It gives primary responsibility for the operational leadership and strategic direction of the Company to our CEO, while the Chair facilitates our Board’s independent oversight of management, promotes communication between senior management and our Board about issues such as management development and succession planning, executive compensation, and company performance, engages with stockholders, and leads our Board’s consideration of key governance matters.
• presides at all meetings of the Board, including executive sessions of the independent directors, • oversees the planning of the annual Board calendar, schedules and sets the agenda for meetings of the Board in consultation with the other directors, and leads the discussion at such meetings, The Chair • chairs the annual meeting of stockholders, • is available in appropriate circumstances to speak on behalf of the Board, and • performs such other functions and responsibilities as set forth in our Corporate Governance Guidelines or as requested by the Board from time to time.
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Corporate Governance (continued) Board Structure and Committee Composition As of the date of this proxy statement, the Board has 14 directors and the following five standing committees: (1) Audit Committee; (2) Finance and Investment Committee; (3) HR and Compensation Committee (the ‘‘HRC Committee’’ or ‘‘HR and Compensation Committee’’); (4) Nominating, Governance and Social Responsibility Committee (the ‘‘NGSR Committee’’); and (5) Technology Committee. The current committee membership and the function of each of these standing committees are described below. Each of the standing committees operates under a written charter adopted by the Board. All of the committee charters are available on our website at investors.hpe.com/governance#committee-charters . Each committee reviews and reassesses the adequacy of their charter annually, conducts annual evaluations of their performance with respect to their duties and responsibilities as laid out in the charter, and reports regularly to the Board with respect to the committees’ activities. Additionally, the Board and each of the committees has the authority to retain, terminate and receive appropriate funding for outside advisors as the Board and/or each committee deems necessary.
The composition of each standing committee is as follows:
Independent Directors Audit FIC HRC NGSRC Tech Daniel Ammann 26JAN201710275806 Marc L. Andreessen 26JAN201710275806 26JAN201710275806 Michael J. Angelakis 26JAN201710275806 26JAN201710275378 Leslie A. Brun 26JAN201710275806 26JAN201710275378 Pamela L. Carter 26JAN201710275806 26JAN201710275806 Raymond J. Lane 26JAN201710275806 26JAN201710275806 Raymond E. Ozzie 26JAN201710275806 26JAN201710275378 Gary M. Reiner 26JAN201710275806 26JAN201710275378 26JAN201710275806 Patricia F. Russo 26JAN201710275806 Lip-Bu Tan 26JAN201710275806 26JAN201710275806 Mary Agnes Wilderotter 26JAN201710275378 26JAN201710275806 Other Directors Ann M. Livermore 26JAN201710275806
Antonio F. Neri(1)
Margaret C. Whitman 26JAN201710275806 26JAN201710275806
(1) As sitting CEO, Antonio Neri facilitates the satisfaction of each committee’s responsibilities and guides management’s support to the board.
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Corporate Governance (continued) Audit Committee For financial reporting process and audit Members Skills and Experiences Michael J. Angelakis Financial Statement Review Leslie A. Brun Audit Pamela L. Carter Compliance Mary Agnes Wilderotter, Chair Risk Management
Risk Oversight Role and Primary Responsibilities:
Audit Compliance Processes • Oversee the performance of our internal audit • Oversee our compliance with legal and function regulatory requirements • Review the qualifications, independence, work • Conduct investigations into complaints product and performance of the independent concerning federal securities laws registered public accounting firm and evaluate • Review results of significant investigations, and and determine the firm’s compensation management’s response to investigations
Financial Reporting Risk Management • Oversee financial reporting process • Review identified risks to HPE • Review and discuss earnings press releases • Review risk assessment and management policies • Review the audit and integrity of our financial statements
Required Qualifications: Each director on the Audit Committee must be independent within the meaning of the New York Stock Exchange (‘‘NYSE’’) standards of independence for directors and audit committee members, and must meet applicable NYSE financial literacy requirements, each as the Board determines. The Board determined that each of the Audit Committee members is independent within the meaning of applicable laws and listing standards. Finally, at least one director on the Audit Committee must be an ‘‘audit committee financial expert,’’ as determined by the Board in accordance with SEC rules. The Board determined that each of Ms. Wilderotter, Chair of the Audit Committee, Mr. Angelakis and Mr. Brun, is an audit committee financial expert.
Finance and Investment Committee For significant treasury matters, strategic transactions, and capital allocation reviews Members Skills and Experiences Daniel Ammann Capital Structure and Strategy Marc L. Andreessen Captive Finance Michael J. Angelakis, Chair Venture Capital Raymond J. Lane Enterprise Information Technology Ann M. Livermore Raymond E. Ozzie Gary M. Reiner Margaret C. Whitman
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Corporate Governance (continued) Risk Oversight Role and Primary Responsibilities:
Finance Investment Mergers & Acquisitions • Oversee significant treasury • Review derivative • Evaluate and revise our mergers matters such as capital structure policy and acquisitions approval and allocation strategy, global policies • Review and approve liquidity, borrowings, currency certain swaps and • Assist the Board in evaluating exposure, dividend policy, share other derivative investment, acquisition, certain issuances and repurchases, and transactions long-term commercial, joint capital spending venture and divestiture • Oversee fixed income • Oversee our loans and loan transactions investments guarantees of third parties • Evaluate the execution, financial • Review capitalization of our results and integration of Financial Services business completed transactions
Required Qualifications: A majority of the directors on the Finance and Investment Committee must be independent within the meaning of applicable laws and listing standards, as the Board determines.
HR and Compensation Committee For executive compensation structure and strategy Members Skills and Experiences Leslie A. Brun, Chair Operations Pamela L. Carter Legal and Regulatory Compliance Mary Agnes Wilderotter Executive Compensation
Risk Oversight Role and Primary Responsibilities:
Compensation Structure & Strategy Human Resources & Workforce Management • Discharge the Board’s responsibilities relating to the compensation of our executives and directors • Generally oversee our human resources and workforce management • Annually review and evaluate management’s performance programs and compensation • Oversee and provide risk management of our compensation structure, including our equity and benefits programs • Review and discuss the Compensation Discussion and Analysis and additional disclosures in compliance with SEC or listing standards
Required Qualifications: Each director on the HRC Committee must be independent within the meaning of applicable laws and listing standards, as the Board determines. In addition, members of the HRC Committee must qualify as ‘‘non-employee directors’’ for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the ‘‘1934 Act’’), and as ‘‘outside directors’’ for purposes of Section 162(m) of the Internal Revenue Code. The
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Corporate Governance (continued) Board determined that each of Mr. Brun, Chair of the HRC Committee, and the HRC Committee members, Ms. Carter, and Ms. Wilderotter, is independent within the meaning of the NYSE standards of independence for directors and compensation committee members, and qualifies as ‘‘non-employee directors’’ and ‘‘outside directors’’ for purposes of Rule 16b-3 under the 1934 Act and Section 162(m) of the Internal Revenue Code, respectively.
Compensation Committee Interlocks and Insider Participation: None of our executive officers served as a member of the compensation committee of another company, or as a director of another company, whose executive officers also served on our compensation committee or as one of our directors.
Nominating, Governance and Social Responsibility Committee For board evaluation, director nomination, and corporate citizenship Members Skills and Experiences Gary M. Reiner, Chair Corporate Governance Patricia F. Russo Operations Lip-Bu Tan Executive and Director Level Leadership Experience
Risk Oversight Role and Primary Responsibilities:
Corporate Governance Board Composition • Develop and review regularly our Corporate Governance • Identify, recruit and recommend Guidelines candidates to be nominated for election as directors • Identify and monitor social, political, and environmental trends and provide guidance relating to public policy • Develop and recommend Board matters and global citizenship criteria for identifying director candidates • Review proposed changes to our Certificate of Incorporation, Bylaws and Board committee charters • Oversee the organization and leadership structure of the Board to • Ensure proper attention is given and effective responses discharge its duties and are made to stockholder concerns responsibilities properly and efficiently • Design and execute annual evaluations of the Board, • Evaluate director independence and committees, and individual directors financial literacy and expertise • Oversee the HRC Committee’s evaluation of senior management
Required Qualifications: Each director on the NGSR Committee must be independent within the meaning of applicable laws and listing standards, as the Board determines. The Board determined that each of the NGSR Committee members is independent within the meaning of applicable laws and listing standards.
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Corporate Governance (continued) Technology Committee For technology and intellectual property portfolio strategy Members Skills and Experiences Marc L. Andreessen Raymond J. Lane Entrepreneurship Raymond E. Ozzie, Chair Research and Development Gary M. Reiner Venture Capital Lip-Bu Tan Enterprise Information Technology Margaret C. Whitman
Risk Oversight Role and Primary Responsibilities:
Impact of investment and other actions upon the strength of our intellectual property and technology strategies
• Make recommendations to the Board concerning our technology strategies
• Assess the health and oversee the execution of our technology strategies
• Assess the scope and quality of our intellectual property
• Provide guidance on technology as it may pertain to market entry and exit, investments, mergers, acquisitions and divestitures, research and development investments, and key competitor and partnership strategies
Required Qualifications: Each director on the Technology Committee will have such qualifications as the Board determines.
Board Risk Oversight Given today’s ever-changing economic, social, and political landscape, structured, conscientious risk management is more important than ever for every public company. Our Board, with the assistance of its committees as discussed below, reviews and oversees our enterprise risk management (‘‘ERM’’) program, which is an enterprise-wide program designed to enable effective and efficient identification of, and management visibility into, critical enterprise risks and to facilitate the incorporation of risk considerations into decision making. The ERM program was established to clearly define risk management roles and responsibilities, bring together senior management to discuss risk, promote visibility and constructive dialogue around risk at the senior management and Board levels and facilitate appropriate risk response strategies.
Board Committees Board of Directors Management Senior Management Oversee Oversees escalated Develops holistic Owns risks identified management’s risks and inclusion of portfolio of our by management response to risks in risk considerations in enterprise risk speciliazed areas strategy decisions 10FEB201800565900
Under the ERM program, management develops a holistic portfolio of our enterprise risks by facilitating business and function risk assessments, performing targeted risk assessments and incorporating information regarding specific categories of risk gathered from various internal Hewlett Packard Enterprise organizations. Management then develops risk response plans for risks categorized as needing management focus and response and monitors other identified risk focus areas. Management provides reports on the risk portfolio and risk response efforts to senior management and to the Audit Committee.
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Corporate Governance (continued) The Board oversees management’s implementation of the ERM program, including reviewing our enterprise risk portfolio and evaluating management’s approach to addressing identified risks. Various Board committees also have responsibilities for oversight of risk management that supplement the ERM program. For example, the HRC Committee considers the risks associated with our compensation policies and practices as discussed below, the Finance and Investment Committee is responsible for overseeing financial risks, and the NGSR Committee oversees risks associated with our governance structure and processes. This structure allows specialized attention to and oversight over key risk areas by aligning our carefully crafted committees with risk oversight in their individual areas of expertise. The Board is kept informed of its committees’ risk oversight and related activities primarily through reports of the committee chairs to the full Board. In addition, the Audit Committee escalates issues relating to risk oversight to the full Board as appropriate to keep the Board appropriately informed of developments that could affect our risk profile or other aspects of our business. The Board also considers specific risk topics in connection with strategic planning and other matters.
Compensation Risk Assessment During fiscal 2017, we undertook an annual review of our material compensation processes, policies and programs for all employees and determined that our compensation programs and practices are not reasonably likely to have material adverse effect on Hewlett Packard Enterprise. In conducting this assessment, we reviewed our compensation risk infrastructure, including our material plans, our risk control systems and governance structure, the design and oversight of our compensation programs and the developments, improvements and other changes made to those programs, and we presented a summary of the findings to the HRC Committee. Overall, we believe that our programs contain an appropriate balance of fixed and variable features and short- and long-term incentives, as well as complementary metrics and reasonable, performance- based goals with linear payout curves under most plans. We believe that these factors, combined with effective Board and management oversight, operate to mitigate risk and reduce the likelihood of employees engaging in excessive risk-taking behavior with respect to the compensation-related aspects of their jobs.
Succession Planning Among the HRC Committee’s responsibilities described in its charter is to oversee succession planning and leadership development. On an ongoing basis, the Board reviews succession plans for the CEO and other senior executive positions. These reviews occur with input from the CEO and EVP, Human Resources and the Board also reviews succession plans in executive session, with no members of management present. Succession reviews for key executive roles, including the CEO position, consist of an assessment of internal candidates as well as the review of external talent as identified by an executive search firm employed by the Board.
In its deliberations around CEO succession that led to the appointment of Antonio Neri, the Board identified several critical experiences, leadership attributes and business performance criteria essential for a successful CEO at Hewlett Packard Enterprise. The Board was assisted in the process by engaging a leading executive assessment firm over the course of several months. In addition, a separate executive search firm provided potential external candidates for consideration based on the success criteria articulated by the Board. These criteria and the assessment of both internal and external candidates led to a unanimous determination by the Board to promote an internal candidate, Antonio Neri into the role. The Board determined that Mr. Neri had the deep technical depth, strong customer and partner relationships, trusted leadership attributes and track record of superior business performance to execute and realize the strategic vision of HPE.
In fiscal 2017, with the spin-off and merger of our Enterprise Services and Software segments, we engaged in two robust organization design and talent selection processes to staff both companies, through which management reviewed selection recommendations below the senior leadership level, considering skill sets, performance, potential and diversity. Where the organizational changes altered our pre-existing succession plans, new successors were identified and relevant talent development plans were implemented.
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Corporate Governance (continued) Director Evaluations Our Board maintains a regular and robust evaluation process designed to continually assess its effectiveness. The Board annually conducts a formal evaluation of the Board, each committee, and individual directors. The process involves the NGSR Committee, working with the Board Chair, designing each year’s evaluation process, selecting from a variety of elements including external evaluators, written evaluations, and group discussions, based on the current dynamics of the Board and of the Company as well as the method of previous annual evaluations. This year, evaluations were completed through individual interviews conducted by the Board Chair, and were intended to gauge effectiveness in board composition and conduct, meeting structure, materials, committee composition and effectiveness; strategic and succession planning; culture and exercise of oversight as well as continued education and access to management.
Limits on Director Service on Other Public Company Boards We have a highly effective and engaged Board, and we believe that our directors’ outside directorships enable them to contribute valuable knowledge and experience to the HPE Board. Nonetheless, the Board is sensitive to the external obligations of its directors and the potential for overboarding to compromise the ability of these directors to effectively serve on the Board. HPE’s Corporate Governance Guidelines limit each director’s service on other boards of public companies to a number that permits them, given their individual circumstances, to perform responsibly all director duties and, in all events, this service may not exceed four other public company boards. Further, the ability of each director to devote sufficient time and attention to director duties is expressly considered as part of the annual board self-evaluation process, which aims to evaluate the effectiveness and engagement of HPE’s directors, including in the context of their external commitments.
While the Board considers its directors’ outside directorships during this evaluation process, the Board recognizes that this is one of many outside obligations which could potentially impair a director’s capacity to dedicate sufficient time and focus to their service on the HPE Board. As such, the Board evaluates many factors when assessing the effectiveness and active involvement of each director. Such other factors include: